§ I now turn to Customs and Excise and will start off with beer. But let me hasten to assure the Committee that I have no intention of repeating the unpopular action of last year when a reduction of the price was made. Owing to the shortage of cereals since the early days of the war, there has been a necessary restriction on the strength of beer, but more recently supplies have improved and it is now possible to allocate for brewing an.extra quantity of barley sufficient to allow a moderate increase in the strength of beer.
§ The brewers have given an assurance that the gravities of all beers will be increased by three degrees, and the Beer Duty which is related to the gravity of beer, is being adjusted to enable this to be done without any additional duty being incurred and also to enable the brewing industry to recover the cost of the extra barley used so as to obviate any rise in the price of beer. The aim is to give the public a better beer at the same price. The extra three degrees represents about a 10 per cent. increase in strength on the average. That is about half-way back to pre-war strength.
§ This will entail a small cost to the Exchequer of about £2,750,000 in this year and 0,250,000 in a full year. The arrangements take effect for beer brewed as from to-morrow, so that beer of the new strength will not be on sale immediately, but it should be available within a few weeks. I hope that this arrangement will please the beer-drinkers without upsetting anyone else.
§ From beer I pass to whisky. Here it is proposed to abolish some remaining 72 Excise allowances on certain categories of home-manufactured spirits. These allowances were for the most part repealed when the Revenue control of distilleries was modernised after the war, except in respect of stocks of spirits produced under the old system of control. It is now proposed to abolish these remaining allowances, which relate exclusively to exported whisky. The total amount, at 3d. a proof gallon, is comparatively small and its payment involves a disproportionate administrative cost. In the case of whisky exported to the United States where, I am glad to say, a lot of it goes, this allowance is offset by an additional import duty of equivalent amount, so that the exporter has to refund in dollars what he receives in sterling. The change will affect whisky exported or shipped as stores on and after 1st May, 1950.
§ Then there is one feature of the Betting Tax which requires a little attention. During the past season some of the smaller football pools have adopted a form of betting known as "fixed odds plus" which enables them to avoid legal liability for the duty, although, in fact, the business is conducted in a way indistinguishable from ordinary pools. This has had no significant effect on the Revenue so far, but in fairness to the great majority of the pools who have refrained from such a practice, it is proposed to close this loophole. Pools conducted in such a way that the promoter retains discretion in the determination of winnings will, therefore, in future seasons be liable to the duty.
§ A small point arises as to the relief of duty for goods defective on importation and destroyed. Under the provisions of Section 10 of the Finance Act, 1933, the duty paid on imported goods which are not up to contract may be refunded provided they are returned unused to the seller with his consent. To meet the wishes of the trade, it has been the practice to allow refund of duty provided the goods are destroyed unused with the consent of the seller. It is now proposed to put this practice on a statutory basis.
§ Next, as to the Purchase Tax for war memorials. Under the provisions of Section 3 of the Finance (No 2) Act, 1945, certain articles are exempt from Purchase Tax if installed as a war memorial in a place of religious worship. This concession was limited to a period of five years 73 and is due to expire at the end of this year; but in accordance with the undertaking given by my predecessor when introducing the provision in 1945, I have looked into this matter again and I propose to extend the concession for a further five years.
§ Provision will also be made to regularise and bring up-to-date the traditional privileges of the Navy as regards duty-free stores.
§ I now come to a more substantial item which I must explain at rather greater length. As those who have studied the capital investment programmes will realise, we have over the last two years been seriously troubled by the excess investment in commercial vehicles in the home market. In 1949, for instance, the target set was for 50,000 new commercial vehicles, but, instead of that, about 100,000 were in fact produced for the home market.
§ The over-investment in this particular item is illustrated by the fact that the forecast for 1949 was £35 million, whereas the actual expenditure turned out at £72,500,000, or £37,500,000 more than had been planned. Nor is it as if the number of vehicles on the roads were too few. Before the war there were some 500,000 commercial goods vehicles licensed in the United Kingdom. By the end of the war the number for fallen to 450,000, but at the end of 1949 it had risen to over 800,000.
§ It has been found that, despite all the efforts to control the number of these vehicles going on the home market by administrative methods, the excessive volume of home sales has continued, and so it has been decided to adopt fiscal measures to help to restrict demand on the home market and assist the industry to achieve the desired diversion of its output to exports. To this end it is proposed to apply a Purchase Tax of 33.1 per cent. to these vehicles.
§ Passenger vehicles and some special types of vehicles not normally used for the carriage of goods will be excluded. The White Paper which will be available afterwards includes a provisional list of such vehicles, which will be discussed with the motor trade before the tax comes into effect on 1st May next. It is estimated that this tax will yield £9 million this year and £13 million in a full year.
74§ There is another small proposal in this category, that is to reduce the rate for higher priced private cars from 663 to 33+ per cent. This is not done to increase their sales markedly in the home market, but in order to keep alive one of our high-quality engineering industries which has a valuable contribution to make to exports, especially to the dollar area.
§ Business has in fact fallen below the point necessary to enable these cars to be manufactured at a price attractive to the export markets and it is desired to re-establish a home market sufficient for this purpose. The cost of this concession will be about £1 million this year and £1,500,000 in a full year. I have received an assurance from the manufacturers that there will be no question of their trying to get an undue expansion of their sales in the home market as a result of this reduction in the tax.
§ I should here mention a matter which caused a little trouble last year and that is the form of the general Resolution so far as it deals with Purchase Tax. A special form has been adopted so as to enable the Committee to have general discussions upon the different rates a Purchase Tax without embarking upon what the right hon. Gentleman the Member for Bristol, West (Mr. Stanley) referred to as a "Dutch auction" on particular items, which, in present political circumstances, would be likely to have particularly unfortunate results.